Cooper Tire & Rubber Company Reports Increased Tire Group
Sales, Second Quarter Results
Second Quarter Highlights
* Earnings per share of 25 cents
* Cooper Tire Group revenue increased 6 percent
* Tire unit sales in North America increased over 3 percent
* Over $40 million in net new automotive business awarded
* Restructuring activities progressing as planned
FINDLAY, Ohio, July 19 Cooper Tire & Rubber Company
today reported second quarter net income of $18 million and
earnings per share of 25 cents. This compares to earnings per share of 5 cents
during the first quarter of 2001 and 48 cents during the second quarter of
2000. Second quarter sales of $829 million represent a 7 percent decrease
from last year, due in part to the sale of non-core operations, while
operating profit was $49 million or 41 percent less than last year.
(Photo: http://www.newscom.com/cgi-bin/prnh/20010404/COOPERLOGO )
For the six-month period ended June 30, 2001, the Company reported
$1.6 billion in net sales, down 12 percent from the first half of 2000, and
net income of $22 million, a decrease of 67 percent compared to last year.
Cooper's Tire Group operations achieved an increase of nearly 6 percent in
net sales during the quarter compared to the second quarter of last year.
This was achieved on unit volume growth that more than doubled that of the
industry. Sales were $433 million compared to $410 million last year.
Operating profits for the tire group were $27 million for the quarter compared
to $42 million in the second quarter of last year. Realized price increases
and improved product mix contributed over $10 million to operating profits.
This improvement was more than offset, however, by higher marginal production
costs as efforts to reduce excess inventory continued through the quarter.
These higher costs reduced operating profit by approximately $16 million.
Additionally, product liability expenses and litigation costs related to class
action lawsuits totaled $13 million for the quarter. In North America,
Cooper's light vehicle tire unit volume increased by more than 3 percent
during the quarter while the light vehicle replacement tire market as a whole
saw an estimated increase of slightly more than 1 percent. North America
division revenue increased by 9 percent as a result of higher unit volumes and
improved pricing.
The Company's Automotive Group, Cooper-Standard Automotive, had sales
during the quarter of $404 million, down 9 percent compared to $444 million in
sales from continuing operations during the same period last year. Holm
Industries and the Winnsboro operations from the group's plastics division
were sold during the second quarter of 2000. Together these operations had
sales of $41 million in the second quarter of last year. Sales for Cooper-
Standard were adversely impacted by continuing softness in original equipment
light vehicle production. Second quarter operating profit for Cooper-Standard
Automotive was $24 million, down 42 percent compared to the same period last
year with the decline being largely driven by lower production volumes and the
resulting operational inefficiencies.
During the quarter, Cooper-Standard Automotive was awarded more than
$40 million in net new business that will phase in over the next several years
as the new platforms come into production. Net new business awarded for the
year now totals approximately $120 million.
The Company's restructuring activities continued on schedule during the
second quarter of 2001. The restructuring plan, which was first announced in
October of 2000, called for the closure or downsizing of 23 facilities and the
reduction of approximately 1,100 positions. To date more than half of the
planned initiatives and headcount reductions have taken place. The
restructuring program is expected to result in annual cost savings of
approximately $30 million when it is completed in early 2002.
"Although our sales results are down from last year's record volume, this
quarter was certainly a solid step in the right direction for Cooper," said
the Company's chairman, president and chief executive officer Thomas A.
Dattilo. "Once again we grew tire sales much faster than the industry. Our
Cooper brand sales were up over 20 percent during the quarter and our
Mastercraft brand sales were up nearly 30 percent. Our tire operations
continue to benefit from improving sales volume and from the price increases
implemented in January.
"Cooper-Standard was again able to book a great deal of new business for
our future and we made significant progress in our global restructuring
initiatives. We are already a leaner, more efficient company for our
efforts."
Outlook
"For the rest of the year, I see the marketplace continuing to improve and
volumes in both sides of our business picking up somewhat," Dattilo continued.
"With the replacement tire market pricing structure improving and light
vehicle inventories coming more in line with where we need them to be,
additional volume should allow us to improve our operating efficiencies and
deliver improved results. In fact, earnings in the second half of the year
should be significantly stronger than in the first half."
Company Description
Cooper Tire & Rubber Company is headquartered in Findlay, Ohio and
specializes in the manufacture and marketing of automotive products. Products
for Cooper's Tire Group include automotive, motorcycle and truck tires, inner
tubes, tread rubber and equipment. In the Automotive Group, Cooper is an
original equipment supplier of sealing, trim, NVH control systems and fluid
handling systems for the automotive industry in North America, Europe,
Australia and South America. Cooper has more than 20,000 employees and
55 manufacturing facilities in 13 countries. For more information, visit the
Company's web site at: http://www.coopertire.com .
Forward-Looking Statements
This report contains "forward-looking statements," as that term is defined
under the Private Securities Litigation Reform Act of 1995, regarding
expectations for future financial performance, which involve uncertainty and
risk. It is possible that the Company's future financial performance may
differ from expectations due to a variety of factors including, but not
limited to: changes in economic and business conditions in the world,
increased competitive activity, the failure to achieve expected sales levels
or announced tire price increases, consolidation among the Company's
competitors and customers, technology advancements, unexpected costs and
charges, fluctuations in raw material and energy prices, changes in interest
and foreign exchange rates, regulatory and other approvals, the cyclical
nature of the automotive industry, the loss of a major customer or program,
risks associated with integrating the operations of The Standard Products
Company and Siebe Automotive, and the failure to achieve synergies or savings
anticipated in both acquisitions, risks associated with the restructuring plan
and the failure to achieve the savings anticipated from the restructuring,
litigation brought against the Company, including the litigation described
under "Class Action Litigation" previously described in the Company's periodic
filings with the U. S. Securities and Exchange Commission, and also including
the ongoing costs of defending against the class action litigation and other
unanticipated events and conditions.
It is not possible to foresee or identify all such factors. Any forward-
looking statements in this report are based on certain assumptions and
analyses made by the Company in light of its experience and perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. Prospective
investors are cautioned that any such statements are not a guarantee of future
performance and actual results or developments may differ materially from
those projected. In particular, the predictions contained in the section of
this press release captioned "Outlook" may not prove to be true for any of the
reasons described herein or for other reasons. The Company makes no
commitment to update any forward-looking statement included herein, or to
disclose any facts, events or circumstances that may affect the accuracy of
any forward-looking statement.
Further information covering issues that could materially affect financial
performance is contained in the Company's periodic filings with the U. S.
Securities and Exchange Commission.
(Statements of income and balance sheets follow ... )
Cooper Tire & Rubber Company
Consolidated Statements of Income
(Dollar amounts in thousands except per share amounts)
Quarter Ended Six Months Ended
June 30 June 30
2000 2001 2000 2001
Net sales $886,652 $829,040 $1,808,917 $1,586,654
Cost of products sold 738,900 713,119 1,526,239 1,376,985
Gross profit 147,752 115,921 282,678 209,669
Restructuring charges 2,473 2,150 2,718 3,072
Amortization of goodwill 4,471 3,981 8,683 7,831
Selling, general and
administrative 57,622 60,846 115,886 124,829
Operating profit 83,186 48,944 155,391 73,937
Interest expense 25,376 23,364 49,298 46,654
Other - net (362) (3,667) (3,721) (7,782)
Income before taxes 58,172 29,247 109,814 35,065
Provision for taxes 22,697 10,909 42,837 13,079
Net Income $35,475 $18,338 $66,977 $21,986
Basic and diluted
earnings per share $0.48 $0.25 $0.90 $0.30
Weighted average shares
outstanding 73,678 72,624 74,703 72,620
Depreciation $42,193 $42,842 $85,473 $84,647
Amortization of goodwill
and other intangibles $5,153 $5,279 $10,042 $10,584
Capital expenditures $58,265 $38,957 $100,224 $76,681
Segment information
Net Sales
Tire $410,420 $433,438 $855,764 $821,673
Automotive 484,925 403,623 969,604 780,411
Eliminations (8,693) (8,021) (16,451) (15,430)
Segment profit
Tire 42,105 26,527 87,213 42,731
Automotive 41,081 23,659 68,178 33,930
Unallocated corporate
charges and
eliminations 0 (1,242) 0 (2,724)
CONSOLIDATED BALANCE SHEETS
June 30
2000 2001
Assets
Current assets:
Cash and cash equivalents $24,994 $20,733
Accounts receivable 679,162 607,639
Inventories 324,824 340,413
Prepaid expenses, deferred income
taxes and other 84,978 89,865
Total current assets 1,113,958 1,058,650
Property, plant and equipment 1,289,996 1,251,287
Goodwill - net 471,500 431,771
Intangibles and other assets 234,193 168,124
$3,109,647 $2,909,832
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $189,032 $150,593
Trade payables and accrued liabilities 450,213 422,672
Income taxes 18,814 24,416
Current portion of debt 13,866 14,131
Total current liabilities 671,925 611,812
Long-term debt 1,046,150 1,036,735
Postretirement benefits other than pensions 183,116 192,339
Other long-term liabilities 59,340 66,672
Deferred income taxes 182,726 59,741
Stockholders' equity 966,390 942,533
$3,109,647 $2,909,832
These interim statements are subject to year-end adjustments.
